Health plans subject to the Employee Retirement Income Security Act (ERISA) must provide information about the plan to participants. Plan participants have a right to know about plan rules, financial information, plan operation and plan management.
When a participant first becomes covered under an ERISA-covered health plan, the individual must receive an SPD (Summary Plan Description). This is a document explaining what benefits the plan provides and how it operates. If a plan is changed, participants must be informed either through a revised SPD or in a separate document called a Summary of Material Modifications (SMM).
Plans must also provide a Summary of Benefits and Coverage (SBC) that describes specific plan coverages. The SBC is drafted on a uniform template with easy to understand language summarizing key features of the plan, such as covered benefits, cost-sharing provisions and coverage limitations.
Certain plans must provide participants with a Summary Annual Report (SAR) after the end of the plan year. A SAR describes the financial position of the plan. If a plan is exempt from the Form 5500 annual reporting requirements, it is also exempt from the SAR requirements (most welfare plans with under 100 participants and totally unfunded welfare plans).
Employers with plans subject to ERISA should understand the communications that are required to be provided to plan participants.
